Following hot on the heels of their four-part deal with Airtel Africa, Helios Towers have announced their first acquisition outside Africa. On May 11 Helios Towers announced the signing of a deal with Omantel, the largest mobile network operator in Oman, for Helios Towers to acquire Omantel’s passive tower infrastructure portfolio of 2,890 sites, for a cash consideration of $575mn. This represents an enterprise value of $615 million including the Group’s estimate of transactions costs and capitalised ground leases of $40 million. The deal includes a further 300 committed build-to-suit sites, and is subject to the usual regulatory closures.
Deal details
Helios Towers is now establishing a presence in the Middle East after a decade focused on Africa, by acquiring Omantel’s 2,890 sites. Helios Towers reports that these assets are expected to deliver revenues of US$59mn and adjusted EBITDA of US$40mn in the first full year of operations, for a healthy 68% margin. Further growth is anticipated through colocations from Ooredoo, Oman’s number two MNO, and Vodafone Oman, which has just entered the market and has thus far relied on Oman Tower Company for site roll-out.
Since going public Helios Towers has aimed to reach over eight markets and over 12,000 sites by 2025. It now appears that Helios Towers will smash through this target, including Senegal, the Airtel Four and Oman will bring Helios Towers up to 13,693 sites in eleven markets on a pro forma basis.
Figure 1: Helios Towers’ 13,693 towers (included unclosed deals)
The deal helps to extend the life span of Helios Towers’ contracted revenue thanks to the 15 year service agreement to be signed by Helios Towers and Omantel. The deal also boosts Helios Towers’ hard currency earning thanks to the Omani rial’s peg to the dollar, taking it to 73% of revenues.
Commenting on the deal, Kash Pandya, Chief Executive Officer of Helios Towers said: “We are delighted to announce the creation of our long-term partnership with Omantel through this transaction. We look forward to supporting Omantel’s growth, and that of the wider Omani mobile market, through our delivery of customer service excellence and world-class infrastructure solutions and services. We view Oman as a very attractive and supportive market for foreign investments, with strong growth and exciting future prospects. We will be further investing capital in Oman as we add to the tower count through greenfield BTS site development and colocations, enhance the current tower portfolio and develop a talented local Omani team.
Through the acquisition, which establishes us as a leading tower operator in Oman, we expect to achieve our Group target of 12,000+ towers well ahead of plan, while also strengthening our business through further hard-currency revenues and diversification into one of the fastest growing markets in the Middle-East.
We look forward to working with Omantel and the other MNOs over the coming years to further develop next generation mobile infrastructure solutions and services in Oman.”
Mr. Talal Said Al Mamari, Chief Executive Officer of Omantel added: “The sale of our passive tower infrastructure is in line with our strategy to develop world class asset light, strategic and advanced communications networks in Oman and to generate the greatest value and efficiency for the benefit of our shareholders, customers and partners. This strategic partnership invites Foreign Direct Investment (FDI) in Oman, supporting Oman as a leading FDI destination in the GCC, while creating jobs and opportunities in the country. This move also allows the monetization of our towers at attractive valuation levels, de-lever our balance sheet and will accelerate network development in next generation advanced technologies while enabling management to focus on innovation and product development while outsourcing non-core infrastructure management to a world-class infrastructure management firm “ Helios Towers. We are excited to enter into this transaction and long-term strategic partnership with Helios Towers who have impressed us with their high level of expertise, interest and partnership credentials.”
Looking to the future, Tom Greenwood told TowerXchange: "Since IPO we have raised about US$2.1bn across various capital markets, signed six major acquisitions for six new markets for about 8,000 towers in total, including committed BTS; this has made us the most diverse towerco in MEA. We are continuing with our M&A strategy and assessing new M&A opportunities as they come up. Despite being on track to meet our 2025 target early our strategy doesn’t really change."
Oman overview
Similar to Helios Towers’ other markets, Oman represents a compelling market for telecoms with its combination of a growing and urbanised population. It is forecast 3,000 new points of service will be required over the next six years. Oman has two active MNOs, Omantel and Ooredoo as well as two mobile resellers, Renna Mobile and Friendi Mobile. The third MNO license was recently awarded to Oman Future Telecommunications, back by local investors, and which is in a strategic partnership with Vodafone.
At present Oman Tower Company is leading Vodafone Oman’s network build out, with a first tranche of 1,000 sites already begun, and roaming agreements with Omantel and Ooredoo allowing for a national launch. Oman Tower Company was established in February 2018 by Oman 70 Holding Company, AktivCo and the Omani Government. As well as its deal with Vodafone Oman Oman Tower Company manages 100s of government owned sites and has a sharing agreement with local petroleum group PDO.
TowerXchange estimates that Oman’s two operators were adding around 200-240 new towers per year, however Vodafone Oman will be adding points of presence at a significantly higher rate, originally through Oman Tower Company, but presumable now also through Helios Towers. Infrastructure sharing has been limited to date but has started to increase as the MNOs aim to execute the rollout of 4G more cost effectively, with current estimates suggesting approximately 10% of towers are shared.
Despite being Helios Towers’ most mature market Oman has energy challenges, which play to the towerco’s strengths. The country is vast for its population with widely spread population and resource extraction industry. Oman is expanding 5G, much like the rest of the Gulf, and Helios Towers will be able to take lessons learned in Oman supporting 5G rollout and apply it in its other markets when appropriate.
Tom Greenwood told TowerXchange: "There are still some power challenges in the market so it is not completely different.Its a more developed market from a technology point of view. 5G is very much on the horizon. Plus there’s the new mobile operator entrance. There’s quite a lot of attractive commercial dynamics to the market. It’s a great market to have as a first move into the Middle East, not least because it is a dollar pegged market."
MENA maturing
This announced deal in Oman follows on the heels of three years of steadily increasing towerco presence in the region. IHS Towers recently announced deal with Zain and Mobily in Saudi Arabia is just the latest sign of a maturing regulatory environment and supportive strategy from the region’s MNOs. TowerXchange expects to see North Africa follow the trend once the Egyptian licence process plays out, plus TowerXchange is waiting to see the results of Zain Group’s strategic partnership with TASC Towers. Green shoots are now beginning to show across the region.
